Analysis of Beta Distribution for Subjective Uncertainty in Cost Models
Technical Report,01 Aug 2018,26 Mar 2020
AIR FORCE INSTITUTE OF TECHNOLOGY WRIGHT-PATTERSON AFB OH WRIGHT-PATTERSON AFB United States
Pagination or Media Count:
Subjective uncertainty exists within the realm of cost estimation. Typical methodology for subjective uncertainty involves elicitation from a subject matter expert to provide a high, low, and most likely value - defining a triangular distribution - to model said uncertainty. This manuscript explores ways to leverage research on elicitation geared towards defining a triangular distribution and provide a simple conversion to a beta distribution usable by cost analysts with various degrees of mathematical knowledge. Furthermore, this manuscript attempts to demonstrate the benefits of using a beta distribution through its application as a conjugate prior for Bayesian updating in cost models.
- Economics and Cost Analysis
- Statistics and Probability